Trade

Deal or No Deal, Steelmakers Are Still Dying

JM Ashby
Written by JM Ashby

We're just a few months away from the two-year anniversary of Trump's tariffs on foreign steel and aluminum and what do we have to show for it?

Stockholders and employees of U.S. Steel received some very bad news this morning as the company announced that most of its operations in the Detroit area will be shutting down. And merry Christmas to you, too.

From Bloomberg:

U.S. Steel Corp. plunged after delivering a barrage of harsh news, warning of a loss and announcing it will shut down most of its Great Lakes Works facility near Detroit, lay off workers and slash its dividend.

The adjusted loss is expected to be about $1.15 a share in the fourth quarter, with a fully diluted loss of 42 cents for 2019, the Pittsburgh-based company said Thursday in a statement. The industrial icon plans to lay off as many as 1,545 workers from the Michigan plant, reduce its quarterly dividend to 1 cent from 5 cents, and prune capital expenditures. [...]

U.S. Steel stock has sunk by about a third this year, hitting the lowest since 2016 in October, even as the broader U.S. equity market hit all-time highs.

"Phase one" of Trump's "greatest and biggest deal ever" with China is not directly related to his tariffs on foreign metal, but it's indirectly related in that his trade war has reduced demand for products that companies like U.S. Steel produce.

Trump is not eliminating any of his existing tariffs on Chinese goods under the new deal and there's little reason to think we'll see a surge in demand that could undo the harm of Trump's continued tariffs on steel and aluminum. Wall Street is getting high on their own supply right now, but Trump's big deal will soon cement a status quo of permanent tariffs that will be with us at least as long as Trump remains in office.

To my knowledge, lifting our tariffs on foreign metal isn't even under discussion even though the duties have not helped anyone. It hasn't even helped the steel industry.

  • muselet

    I doubt anyone in the metals industry believed for a second that tariffs on imports would help domestic producers.

    As ever, I wonder where all the loud and proud free traders have slunk off to. If something like this happened during a D administration—or even a less batshit R administration—every one of them would be screaming like a howler monkey with his nuts in a vise (apologies for the mental image).

    –alopecia